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. A <br /> ,� COUNCIL MEETING <br /> JAN 2 6 2015 <br /> REQUEST FOR COUNCIL ACTION CITY OF ORONO <br /> DATE: January 26, 2015 <br /> ITEM NO: 4 <br /> Department Approval: Administra r Re ' wed: Agenda Section: <br /> Name Adam T.Edwards Public Works Director/ <br /> Title Public Works Director City Engineer's Report <br /> Item Description: Bulk Fuel Contract <br /> List of Exhibits <br /> A- Example Terms and conditions for fixed Fuel Price Fuel Supply Agreement <br /> B- Example Fixed Price Letter Agreement <br /> 1. Purpose. The purpose of this request is to gain Council approval for the purchase of bulk <br /> fuel for 2015 (February 2015-February 2016). <br /> 2. Background. Prior to 2014, the City purchased fuel on an as needed basis. This resulted in <br /> varying fuel prices throughout the year. In 2014 the City aligned itself with the State fixed price <br /> fuel contract. The contract committed the City to purchase 33,600 gallons of gasoline and 8,400 <br /> gallons of diesel at the fixed prices of$2.65 per gal for gasoline and diesel at$3.09/$3.17 <br /> (summer and winter blends). This represented�90% of the overall fuel purchase for the City. <br /> The remaining fuel was purchased at the current fuel cost at the time of the purchases. As a <br /> result the City saved� $9,873 in Gasoline and�$2,709 in Diesel over the year compared to pre- <br /> state tax retail rates. <br /> 3. Current Pricing. Currently fuel is trading at around the following per gallon pre-t�rates: <br /> 87 Octane 10% Gas—$2.22 and #2 ULSD Dyed B10 Diesel - $2.51 (These rates constantly <br /> fluctuate with the futures market)These rates are lower than last year but higher than current at <br /> the pump prices. Historically gasoline prices will rise 30-40 cents per gallon for the suxnmer and <br /> the media is reporting potential fuel price increases in the Midwest this year due to major <br /> refinery maintenance. (At these rates with similar fixed price purchases to last year the City <br /> would realize a savings of�$14,256 for Gasoline and�$3,680 for Diesel from 2014.) <br /> 4. Risk. The risk is that prices stay below the fixed price offered above in which case the City <br /> would lose an opportunity for even more savings. <br /> 5. Way forward. If the City decides to proceed with fixed cost contract for bulk fuel, we <br /> would contract with, Manfield Oil, for the following: <br /> a. Fixed Price. The City would contract for approximately 75%of our need with fixed <br /> price. The City Council would establish a maximum price range for both gasoline and diesel. <br /> 1 <br />